Glossary of Terms

Accrue

The process where interest accumulates on a loan. When "interest accrues on a loan," the interest due on the loan is accumulating.

Capitalization

The addition of unpaid interest to the principal balance of a loan. When the interest is not paid as it accrues during periods of in-school status, the grace period, deferment, or forbearance, your lender may capitalize the interest. This increases the outstanding principal amount due on the loan and may cause your monthly payment amount to increase. Interest is then charged on that higher principal balance, increasing the overall cost of the loan.

COA

The Cost of Attendance, or COA, is the estimated cost of attending a university for a year as a full-time student. It typically includes tuition and fees, books and supplies, room and board, transportation and miscellaneous expenses. For more, please visit our page on Determining Financial Need.

Consolidation

The process of combining one or more loans into a single new loan.

Default

Failure to repay a loan according to the terms agreed to when you signed a promissory note.

Deferment

A postponement of payment on a loan that is allowed under certain conditions and during which interest does not accrue on Direct Subsidized Loans, Subsidized Federal Stafford Loans, and Federal Perkins Loans. All other federal student loans that are deferred will continue to accrue interest. Any unpaid interest that accrued during the deferment period may be added to the principal balance (capitalized) of the loan(s).

Dependency

Students are classified as dependent or independent based upon information submitted on the FAFSA. According to the U.S. Department of Education, most undergraduate students are considered dependent and their parents have the primary responsibility of providing for post-secondary education costs. Graduate students are automatically considered independent by the federal government for financial aid purposes, even if they are still claimed on their parents' taxes. For more information, please see our Dependency Status page.

Direct Consolidation Loan

A federal loan made by the U.S. Department of Education that allows you to combine one or more federal student loans into one new loan. As a result of consolidation, you will only have to make one monthly payment on your federal loans and the amount of time you have to repay your loan will be extended.

Disbursement

Disbursement is payment of federal student aid funds to the student by the school. Students generally receive their federal student funds in two or more disbursements.

EFC

The Expected Family Contribution, or EFC, is the amount that the student's family is expected to contribute toward the Cost of Attendance (COA). The EFC is calculated based on the information the student provides on the FAFSA. For more information, please visit our page on Determining Financial Need.

Entrance Counseling

All students taking out Direct Subsidized or Unsubsidized Loans are required to complete entrance counseling. Entrance counseling is intended to help you understand your rights and responsibilities as a student loan borrower. The process takes approximately 30 minutes and can be completed online at StudentLoans.gov.

Exit Counseling

Similar to Entrance Counseling, the exit counseling session is intended to remind you of your rights and responsibilities as a Federal student loan borrower. It also provides information about repayment plans and deferment or forbearance options. It can be completed online at StudentLoans.gov.

FAFSA

The Free Application for Federal Student Aid (FAFSA) is the form used by the U.S. Department of Education to determine a student's level of financial need and Expected Family Contribution (EFC). Information on a student's income and assets, parents' income and assets, and other household information may be requested. This information is then referred to the schools selected by the student. All federal grants, loans, and Federal Work Study (FWS) awards are determined by the FAFSA. For more information, please view the FAFSA Help section on FAFSA.ed.gov.

Federal Family Education (FFEL) Program

Under this program, private lenders provided loans to students that were guaranteed by the federal government. These loans included Subsidized Federal Stafford Loans, Unsubsidized Federal Stafford Loans, FFEL PLUS Loans, and FFEL Consolidation Loans. Federal student loans under the FFEL Program are no longer made by private lenders. Instead, all federal student loans come directly from the U.S. Department of Education under the Direct Loan Program.

FERPA

The Family Education Rights and Privacy Act (FERPA) addresses the privacy of students by prohibiting the disclosure of most personally identifiable information contained in the student's education records. Information within the student's education record, generally, may not be released without the student's written consent. In compliance with FERPA and due to the highly confidential nature of financial data, UMBC requires an Authorization to Disclose Information Form be completed to allow UMBC to discuss a student's financial information (including billing, financial aid, and scholarships) with anyone other than the student.

Forbearance

A period during which your monthly loan payments are temporarily suspended or reduced. Your lender may grant you forbearance if you are willing but unable to make loan payments due to certain types of financial hardships. During forbearance, principal payments are postponed but interest continues to accrue. Unpaid interest that accrues during the forbearance will be added to the principal balance (capitalized) of your loan(s), increasing the amount you owe.

FWS

The Federal Work Study (FWS) program helps students who demonstrate financial need earn funding through part-time work. For more information on the FWS program or to add your name to the Interest List, visit our FWS page.

Grace Period

The six months after graduation you are not required to make payments on Direct Stafford Loans or nine months for Perkins Loans.

Grants

Grants are a type of gift aid that does not require repayment. Each grant has different requirements for eligibility. Eligibility for need based grants is determined by the information provided by the student on the FAFSA. For more information, visit our Grants page.

Interest

A loan expense charged by the lender and paid by the borrower for the use of borrowed money. The expense is calculated as a percentage of the unpaid principal amount (loan amount) borrowed.

IRS Data Retrieval Tool

The IRS Data Retrieval Tool allows FAFSA on the web applicants to request and retrieve their tax information directly from the IRS. Use of this tool will increase the accuracy of your FAFSA information and streamline the application, review and award process. For more information and an instructional video on how to use it, visit our IRS Data Retrieval Tool page.

Lender

The organization that made the loan initially; the lender could by the borrower's school; a bank, credit under, or other lending institution; or the U.S. Department of Education.

Loan Servicer

A company that collects payments on a loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a loan on behalf of a lender. For more information, you may visit StudentAid.ed.gov. If you are unsure of who your federal student loan servicer is, you can look it up on NSLDS.

MDCAPS

The Maryland College Aid Processing System (MDCAPS) is MHEC's comprehensive financial aid system that allows them to process state scholarship applications and allocate funds more efficiently using today's technology. For more information, please visit the MDCAPS website.

MHEC

The Maryland Higher Education Commission (MHEC) is the State of Maryland's higher education coordinating board responsible for establishing statewide polices for Maryland public and private colleges and universities and for-profit career schools. For more information, please visit the MHEC website.

MPN

A Master Promissory Note (MPN) is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s); for instance, it will include information on how interest is calculated and what deferment and cancellation provisions are available to you. For Federal Direct loans, your MPN is good for ten (10) years - this means that you do not have to accept a loan each year as long as you received a loan in the previous school year. For more information, you may visit StudentAid.ed.gov

MPP

The UMBC Monthly Payment Plan (MPP) enables students to pay their allowable fall and spring semester charges on an installment basis with no interest charges. For more information, visit our MPP page.

NSLDS

The National Student Loan Data System (NSLDS) is the U.S. Department of Education's central database for student aid. Students may use NSLDS to review all of the federal student loans they have received.

Satisfactory Academic Progress (SAP)

UMBC is required to monitor its student's academic progress to ensure that they maintain a minimum standard GPA and make steady progress toward degree completion. Students who do not meet the SAP requirements may lose their financial aid eligibility. For more information, please visit our SAP page.

Shopping Sheet

The Financial Aid Shopping Sheet is a standardized form developed by the U.S. Department of Education to simplify the information prospective students receive about costs and financial aid to compare institutions when deciding where to attend. You can view your UMBC Shopping Sheet via your myUMBC account when you view your financial aid package. For details on how to access your financial aid package, please view our instructional video.

Subsidized Loans

The Federal Direct Subsidized Stafford Loan is awarded to meet financial need after other resources are subtracted. Maximum annual loan limits apply and may limit the amount that a student may borrow. Repayment of the loan begins six months after the student is no longer enrolled at least half time (six credits) and the federal government pays interest on the loan for you during eligible periods of enrollment. For more information, visit our page on Federal Direct Subsidized Stafford Loans.

Tax Return Transcript

The tax return transcript is a document tax filers can request from the IRS that includes the information submitted on the tax return (IRS Forms 1040, 1040A, or 1040EXZ). It does not include any changes the tax filer or the tax preparer made after filing the original tax return.

Unsubsidized Loans

A Federal Direct Unsubsidized Stafford Loan is not based on financial need. It is available to you if you have not reached your annual maximum loan limit combined with your Federal Direct Subsidized Stafford Loan eligibility. The interest on an Unsubsidized Stafford Loan is the student's responsibility from the time the loan funds are sent to the university until it is paid in full. For more information, visit our page on Federal Direct Unsubsidized Stafford Loans.

Verification

Verification is the process of confirming that information reported by the student and parent(s) or spouse on the FAFSA is accurate. Each year, approximately 30 percent of student applicants are randomly selected by the federal processor for verification. A student may also be selected by the university. For more information, please visit our Verification page.